Nikon 2010 Annual Report Download - page 47

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Nikon Corporation Annual Report 2010
A reconciliation between the normal effective statutory tax rates, and the actual effective tax rates refl ected in the consolidated statements of
operations for the fi scal years ended March 31, 2010 and 2009 is as follows:
Year ended March 31,
2010 2009
Normal statutory tax rate 40.6% 40.6%
Tax credit for research and development costs (4.0)
Tax difference of consolidated subsidiaries 13.1 (6.0)
Amortization of goodwill (1.8)
Deferred tax assets for unrealizable profi ts (12.3)
Dividends from foreign subsidiaries not applicable to foreign tax credits 9.1
Increase in valuation allowance 3.5
Tax effect on retained earnings for foreign subsidiaries (5.4) (11.2)
Tax benefi ts for a foreign manufacturing subsidiary (4.4)
One-time depreciation of work in progress of development costs (6.7)
Other—net 1.1 0.8
Actual effective tax rate 28.6% 28.4%
12. Research and Development Costs
Research and development costs charged to income were ¥60,261 million ($647,689 thousand) and ¥61,489 million for the fi scal years ended March
31, 2010 and 2009, respectively.
13. Leases
The Group leases mainly certain machinery and equipment for manufacturing.
The minimum rental commitments under noncancellable operating leases at March 31, 2010 and 2009 were as follows:.
Millions of Yen
Thousands of
U.S. Dollars
2010 2009 2010
Due within one year ¥2,292 ¥2,258 $24,636
Due after one year 5,014 2,454 53,892
Total ¥7,306 ¥4,712 $78,528
14. Financial Instruments and Related Disclosures
On March 10, 2008, the ASBJ revised ASBJ Statement No. 10 “Account-
ing Standard for Financial Instruments” and issued ASBJ Guidance
No. 19 “Guidance on Accounting Standard for Financial Instruments
and Related Disclosures”. This accounting standard and the guidance
are applicable to fi nancial instruments and related disclosures at the
end of the fi scal years ending on or after March 31, 2010 with early
adoption permitted from the beginning of the fi scal years ending
before March 31, 2010. The Group applied the revised accounting
standard and the new guidance effective March 31, 2010.
(1) Group Policy for Financial Instruments
The Group restricts the fund management to short-term deposits, and
funding is mainly treated by bank loans and bond issuance. Derivatives
are used, not for speculative purposes, but to hedge foreign exchange
risk and interest rate exposures.
(2) Nature and Extent of Risks Arising from Financial Instruments
and Risk Management for Financial Instruments
Receivables such as trade notes and trade accounts are exposed to
customer credit risk. The Group manages its credit risk from receivables
on the basis of internal guidelines, which include monitoring of pay-
ment term and balances of major customers by each business adminis-
tration department to identify the default risk of customers in the early
stage. Although receivables in foreign currencies due to global opera-
tions are exposed to the market risk of fl uctuation in foreign currency
exchange rates, the position, net of payables in foreign currencies, is
hedged by using forward foreign currency contracts.
Investment securities are exposed to the risk of market price fl uc-
tuations but they are managed by monitoring market values and
fi nancial position of issuers on a regular basis. In addition securities
other than held-to-maturity securities are continually reviewed as to
the situation, taking into account the relationship between the Group
and trading partners.